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Top 12 Estate And Legacy Planning Techniques

  1. Revocable Trust: A trust is a legal device used to provide management of property. An essential element of any trust is changing ownership of property to make the the trust the owner of the property. Trusts can be revocable or irrevocable and a revocable trust that becomes irrevocable at the death of the person who made the trust is often the centerpiece of a comprehensive estate plan because it can be designed to fulfill multiple purposes. A revocable trust can be used to avoid probate, to plan for incapacity, to maintain eligibility for Medicaid, to provide asset protection, to save taxes, and for many other purposes.
  2. Power of Attorney: A Power of Attorney is a legal device that allows a person to give someone else the authority to act on his or her behalf to handle some type of matter — the kinds of matters that can be delegated may include management of property or even medical decisions The Louisiana Civil Code calls this kind of relationship a “Mandate” and has detailed articles governing these relationships. The Civil Code calls the person to whom authority is delegated the “mandatary” but other states call this person the “agent” or the “attorney in fact.” Since the terms “Power of Attorney” and “Agent” are so common, we use them in Louisiana even though they do not actually exist in our Civil Code.
  3. Financial Power of Attorney: This is sometimes also called a “Business Power of Attorney” and it is a device that designates one person to handle business or financial matters for another person. Mandates and Powers of Attorney can be very general or very specific. These instruments are very flexible and easy to create but these factors can also become a disadvantages in some circumstances.
  4. Health Care Power of Attorney: This is an estate planning device that allows a person to delegate health care decisions to someone else in situations where the person granting the authority cannot make their own decisions. The Louisiana Civil Code calls this kind of relationship a “Mandate” and has detailed articles governing these relationships.
  5. Annual Gift Tax Exclusion: Technique to allow gifts without the imposition of estate or gift taxes and without using lifetime exclusion.
  6. Irrevocable Life Insurance Trust: A type of trust that can be designed to prevent estate taxes on life insurance proceeds received at the death of an insured.
  7. Family Limited Partnership: A written legal instrument that establishes an entity used to:
    1. Provide asset protection for partnership property from the creditors of a partner
    2. Provide protection for limited partners from creditors
    3. Enable gifts to children and parents maintaining management control
    4. Reduce transfer tax value of property.
  8. Family Limited Liability Company: The “limited liability company” or LLC is a legal device that takes advantages of the differences between state and federal law to create an entity that provides the liability protection of a corporation under state law while being taxed like a partnership under federal law. Federal tax law totally ignores the existence of a single-member LLC for tax purposes and treats all income and expenses of a single-member LLC as belonging to the single member. Family LLCs and Family Limited Partnership provide many of the same benefits so choosing which of these devices to use depends on the specific factors of the family involved.
  9. Children’s or Grandchildren’s Irrevocable Education Trust: A type of trust that can be established by parents and grandparents for a child’s or grandchild’s education.
  10. Charitable Remainder Interest Trust: A type of trust that can be established so that a person transfers property to a charitable trust but keeps an income stream from the property transferred. The donor who sets up the trust receives a charitable contribution income tax deduction, and avoids a capital gains tax on transferred property.
  11. Fractional Interest Gift: This estate planning device allows a donor to transfer partial interests in real property to donees and obtain fractional interest discounts for estate and gift tax purposes.
  12. Private Foundation: This is an entity used by higher-wealth families to receive charitable income, gift, or estate tax deduction while allowing the family to retain some control over the assets in the foundation.